How India Avoided a Crisis

“In India, we never had anything close to the subprime loan,” said Chandra Kochhar, the chief financial officer of India’s largest private bank, Icici. (A few days after I spoke to her, Ms. Kochhar was named the bank’s new chief executive, in a move that had long been anticipated.) “All lending to individuals is based on their income. That is a big difference between your banking system and ours.” She continued: “Indian banks are not levered like American banks. Capital ratios are 12 and 13 percent, instead of 7 or 8 percent. All those exotic structures like C.D.O. and securitizations are a very tiny part of our banking system. So a lot of the temptations didn’t exist.”

And when I went to see Deepak Parekh, the chief executive of HDFC, which was founded in 1977 as the country’s first specialized mortgage bank, practically the first words out of his mouth were these: “We don’t do interest-only or subprime loans. When the bubble was going on, we did not change any of our policies. We did not change any of our systems. We did not change our thought process. We never gave more money to a borrower because the value of the house had gone up. Citibank has a few home equity loans, but most banks in India don’t make those kinds of loans. Our nonperforming loans are less than 1 percent.”

Real Estate Bank India (REBI), is planning to set up 3,000 franchisees across the country

Across the eastern region, REBI would open 200 stores, said Hemant Sikaria, regional head of REBI, on the occasion of launch of two-day expo, Franchise Expo 2008-09.

This would be a platform for entrepreneurs and business houses to explore business opportunities in real estate.

REBI was present in places like Bangalore, Bhubaneshwar, Chennai, Coimbatore, Delhi, Hyderabad, Jabalpur, Jaipur, Lucknow, Ludhiana, Mysore, Surat, Trichy, Truvandrum and Varanasi.

“India’s realty segment is the only industry with a track record of 30-35 per cent growth per year in terms of investment. With the realty sector booming in east, we are confident that to be able to provide solutions to all real estate requirements of the people here,” Sikaria said.

Indian real estate goes abroad

state, Cento International Investments, U K based real estate consultants have organised 'Invest India Tour London 2008.'

Cento along with Baron Group International, a U K based property investment company and E 18, the marketing division of Network 18 have organised this tour which they say will provide a platform for real estate developers from India to interact with foreign investors and help promote the country as a lucrative investment hub.

The United Kingdom (UK) with a population of 15 million has an untapped market of investors for the real estate in India, Baron Group MD Nayan Bavishi said.

India rises in real estate transparency index

The domestic real estate market, which is grappling with slowdown in demand and a tight liquidity situation, may have some reason to cheer. When it comes to the level of transparency in commercial real estate within Asia Pacific, both India and China have improved their position — moving up from low transparency to semi-transparency, according to Jones Lang LaSalle.

“Five markets moved from Tier 4 (low transparency) to Tier 3 (semi-transparent): China, Dubai, India, Romania, and Ukraine. Vietnam, moved from Tier 5 (opaque) to Tier 4. Although Venezuela’s score declined, it did not move to a lower tier,” the Global Real Estate Transparency Index 2008, said.

The transparency has been measured on parameters such as availability of data on real estate market, data on real estate performance indices, accounting standards and regulations, governance, clarity in taxes, planning codes, land registry, ease of transaction (sale or lease), professional standard for agents, amongst others; hence an improvement in a market’s